Chinese Purchases of US Companies Proliferate

Tuesday, 12 Feb 2013 07:48 AM

By Dan Weil

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The Chinese are coming, the Chinese are coming. And they’re snapping up U.S. companies along the way.

Chinese entities agreed last year to spend more than $10 billion buying all or part of 46 companies here, according to Dealogic. That value exceeds all the deals inked from 2009 through 2011 combined, The Wall Street Journal reports.

In addition, Chinese firms announced $23 billion worth of deals for Canadian companies or stakes in 2012.

Forbes Columnist:
‘Who the Hell Cleared This?’

China is staying away from big companies and ones involved with defense or important technologies to avoid rejection by the U.S. government, after some earlier failures.

Most of the concerns China is targeting are small — under $500 million — and closely held in order to increase the odds of being approved.

Last week, the government approved Wanxiang America’s purchase of battery maker A123 Systems for $257 million.

“You just need to understand the rules, follow the rules, be very transparent and let them make the decision,” says Pin Ni, president of Wanxiang America, who started the U.S. offshoot of China's Wanxiang Group out of a home office in Chicago.

Among the biggest deals last year was one to sell the movie-theater chain AMC Entertainment Holdings to Wanda Group for $700 million.

“With the dollar being so cheap, the North American market stable, the richness of natural resources here and the large amount of Chinese capital, a significant amount of that capital is headed this way,” Robert Profusek, head of Jones Day law firm’s mergers-and-acquisitions practice, tells The Journal.

Ironically, the foreign investment (such as China’s) that has been sparked by a weak dollar could itself push the currency back up.

“Despite the rancor in the U.S. political process, foreigners remain keenly interested in buying U.S. assets, which should help to support the dollar versus many other currencies,” Jay Bryson, an economist with Wells Fargo, wrote last month in a commentary obtained by The Journal.

Forbes Columnist: ‘Who the Hell Cleared This?’

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